Imerys posts full year 2023 current EBITDA in line with guidance and substantial cash flow generation
- Full year revenue at €3,794 million impacted by weak demand in most markets, in particular residential construction,and adverse currency effect
- Current EBITDA in line with guidance1 at €633 million; current EBITDA margin resilient at 16.7% benefiting from cost reductions (€126 million)
- Substantial net current free operating cash flow generation of €191 million (2022: €20 million), and €288 million (2022: €105 million) before strategic capital expenditures, supported by working capital management actions
- Solid financial structure and strong liquidity position: net debt reduced by €548 million (-33%), improving the net financial debt to current EBITDA ratio to 1.8x compared to 2.3x in December 2022
- Proposal of a cash dividend of €1.35 per share, representing a total distribution of €115 million
- New 1.5°C trajectory validated by SBTi: reduction of 42% of scope 1 & 2 greenhouse gas emissions (tCO2eq) and of 25% of scope 3 by 2030 from 2021 base year
Alessandro Dazza, Chief Executive Officer, said:
"In 2023, Imerys continued to demonstrate resilience and agility in a complex market environment. The current EBITDA margin remained stable and cash flow generation increased significantly. These results have been achieved by a strongly committed team, of which I am extremely proud.
Our main markets may have reached a low point and we will utilize every lever at our disposal to increase sales moving forward, supported by recent capacity additions and innovative mobile and sustainable energy products.
At Imerys, we look forward to demonstrating the robustness of our business model and achieving in 2024 new milestones on our strategic roadmap."
| Consolidated results(2)(3)(4) (€ millions) | FY 2022 | FY 2023 | Change 2023 / 2022 |
|---|---|---|---|
Revenue Organic growth | 4,282 +12.5% | 3,794 -9.0% | -11.4% - |
Current EBITDA Current EBITDA margin | 720 16.8% | 633 16.7% | -12.2% - |
Current operating income Current operating margin | 439 10.2% | 365 9.6% | -16.9% - |
Operating income(5) | 318 | 108 | -66.2% |
Current net income from continuing operations, Group share | 278 | 242 | -12.8% |
Net income from continuing operations, Group share(5) | 173 | 8 | - |
Net income from discontinued activities, Group share | 64 | 44 | - |
Net income, Group share(5) | 237 | 51 | -78.4% |
Net current free operating cash flow (incl. discontinued ope.) | 20 | 191 | +855% |
Net financial debt (as at December 31) | 1,666 | 1,118 | -32.9% |
Current net income from continuing operations per share(6) | €3.28 | €2.86 | -12.8% |
1Guidance announced on July 27, 2023: FY 2023 current EBITDA between €630 million and €650 million.
2According to IFRS 5, HTS is accounted for as a discontinued operation and reported under ‘Net income from discontinued activities’ (its revenue, expenses and pre-tax profits are not detailed in the consolidated income statement).
3The definition of alternative performance measures can be found in the glossary at the end of the press release.
4Figures may not sum due to rounding.
5 This includes the impairment of the assets serving the paper market for €175 million.
6Weighted average number of outstanding shares: 84,564,199 in 2023 compared with 84,575,054 in 2022.
Proposed dividend
At the Shareholders’ General Meeting of May 14, 2024, the Board of Directors will propose an ordinary cash dividend of €1.35 per share (vs. €1.50 ordinary cash dividend paid in 2023), which represents a distribution of €115 million.7 This amount corresponds to 50% of net income from current operations, Group share (to be compared with 46% of last year for the ordinary cash dividend).
Update on strategic projects
As part of its drive to support the energy transition with mineral solutions, Imerys is:
- Completing its development in the fast-growing lithium-ion battery market (over €140 million invested in capacity increases over the past 3 years). As per plan, a new production line of carbon black for mobile energy at Willebroek (Belgium) was commissioned in 2023 while the construction of the next one is well underway. The capacity expansion for synthetic graphite production in Bodio (Switzerland) was commissioned in Q4 2023.
- Investing €43 million in a greenfield plant in Wuhu (China), producing high-quality talc used for lightweighting of polymers and typically addressing automotive applications, EVs in particular. This plant was successfully commissioned in Q4 2023.
In parallel, the lithium projects are progressing well:
- In France, the EMILI project made significant progress in 2023. The scoping study confirmed the attractiveness of the deposit and robustness of the technology with the production at laboratory scale of the first battery-grade lithium hydroxide from the Beauvoir granite. The locations of the loading station and the conversion plant were announced in January 2024. The "Commission Nationale du Débat Public" will host a public debate in Q2 2024 and will release its report in Q3. In parallel, pre-feasibility study is to be concluded before year end, and the construction of the industrial pilot is on track to be launched in 2024, pending necessary permitting.
- In the UK, the strategic partnership between Imerys and British Lithium, named “Imerys British Lithium”, aims at becoming the leading lithium hub in the UK, with a targeted annual production of 21,000 tons of lithium carbonate equivalent, enough to equip 500,000 electric cars per year, by the end of the decade. Drilling campaigns will continue to increase the level of accuracy on deposit size and grade. Battery-grade lithium carbonate has been produced at a pilot lab scale, helping the process optimization as part of the pre-feasibility study still ongoing.
Imerys has received expressions of interest for the potential divestiture of its assets serving the paper market. The Group remains steadfast in its determination to execute its strategy of focusing on its core, high-growth specialty minerals business, and may therefore consider such expressions of interest for the benefit of its customers, employees and shareholders. In this context, and also reflecting current market conditions, Imerys has decided to adjust the value of these assets in its financial accounts.
7 Ex-dividend and payment dates would be May 21, 2024 and May 23, 2024 respectively
Sustainability
Highlights
Imerys has further progressed on its ambitious decarbonisation roadmap, and its newly-set targets, validated last July by the SBTi,8 are aligned with a 1.5°C trajectory for 2030. The Group set its objectives to reduce absolute scope 1 and 2 greenhouse gas emissions by 42% (tCO2eq) and scope 3 by 25% by 2030 from a 2021 base year. The scope 1 includes direct emissions from sources owned or controlled by Imerys, and scope 2 concerns indirect emissions from the production of electricity, heat or steam purchased by the Group.
To fulfill this ambitious roadmap, the Group has started to implement specific actions, such as a multi-year contract signed with E.On, one of Europe's largest operators of energy networks and energy infrastructure, in May 2023 to valorize waste syngas and generate electricity in Willebroek (Belgium). The majority of the energy produced will be supplied to the local grid to satisfy the yearly consumption of approximately 40,000 households.
Imerys confirmed its commitment to reducing carbon emissions by issuing in November 2023 a €500 million sustainability-linked bond (6-year maturity) with an annual fixed rated coupon of 4.75%. Bond investors will receive a premium payment in 2029 of 0.75% of the principal amount, should the Group not meet its objectives at the end of 2028.
Performance
Following the successful completion of its first ESG sustainability plan, the Group has launched a more ambitious plan for 2025 centered around three core pillars: empowering our people, growing with our customers and caring for our planet. With regards to the Group decarbonisation roadmap, several levers have been activated, such as fuel switching and biomass utilization, electrification, power purchase agreements, energy efficiency and process innovation. In 2023, Imerys has reduced its scope 1 & 2 CO2 emission by 24% compared to 2021 in absolute terms.
| FY 2022 (baseline) | FY 2023 | Target 2025 | |
|---|---|---|---|
| Empowering our people | |||
Occupational safety:
|
2.43 3.0 |
2.36 3.1 |
2.18 (2024) 3.3 |
| Increase the score of the Diversity, Equity & Inclusion Index (10) (including KPIs related to Gender, Nationality, Disability and inclusion) | 0% | 40% | 100% |
| Growing with our customers | |||
| Business ethics and responsible purchasing management: proportion of suppliers assessed against environmental, social and governance criteria (11) | 53% (12) | 61% (13) | 75% |
| Assess the Products in Application Combinations (PAC) of Imerys product portfolio (by revenue) according to sustainability criteria (14) | 55% | 65% | 75% |
| Caring for our planet | |||
| Improve water management by ensuring priority sites (15) comply with new water reporting requirements | 0% | 22% | 100% |
| Reduce impact on biodiversity by filling our Act4nature commitments and conducting biodiversity audits at the priority sites (16) | 0% | 57% | 100% |
| Reduce Group scope 1 & 2 greenhouse gas emissions (tCO2eq) by 42% from 2021 base year in alignment with a 1.5°C trajectory by the end of 2030 | 0% (2021 baseline) | -24% | -42% (2030) |
8 The Science Based Targets initiative is a collaboration between the CDP, the United Nations Global Compact, World Resources Institute and the World Wide Fund for Nature.
9 Includes all accidents without lost time whenever a healthcare professional is involved in the treatment, even if only for first aid.
10 Imerys’ Diversity, Equity & Inclusion Index is a composite metric used to track diversity, equity and inclusion across a range of dimensions including gender balance, pay equity, nationality, disability, as well as inclusion.
11By expenditure.
12In 2023, the 2022 baseline was recalculated based on spending from January 1st to December 31st 2022.
13Based on spending from January 1st to June 30th 2023.
14Based on the SustainAgility Solutions Assessment framework a “SustainAgility Solution” is a product in an application that has scored within the two highest categories of the four possible categories.
15Priority sites refer to withdrawal > 1 Mm3 or located in water stress zones.
16Priority sites for biodiversity audits have been defined as sites with a quarry that extracts more than 1 million tons per year, or are located within a radius of 5 km of an area classified as IUCN category I, II or III, or are located in a biodiversity hotspot within a radius of 5 km of an area classified IUCN category IV.
Outlook
After unprecedented destocking in 2023, markets have stabilized. Construction, notably residential, and, to some extent, Automotive, are expected to remain lackluster, still impacted by high interest rates, while other markets such as Consumers and Life Sciences, or Energy and Electronics are expected to progress. In this uncertain economic and geopolitical environment, Imerys will maintain strict cost discipline and prioritize growth thanks to new industrial capacities, innovative products and its exposure to mobile and sustainable energy.
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